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AGRI-ENVIRONMENTAL INDICATORS IN THE MANAGEMENT OF

FARMS. THE SPANISH CASE

Elisa I. Cano Montero

Clara I. Muñoz Colomina

Elena Urquia Grande

ABSTRACT

The current reform of the EC Agricultural Policy decouples subsidies from production

and introduces the new concept of “eco-conditionality” which makes the receipt of

subsidies contingent on compliance with a number of environmental standards.

This reform, put in place by the Commission, involves a high risk that the cultivation of

some Mediterranean products will be abandoned. Their producers will have to meet the

challenge of competitiveness and avail themselves of appropriate mechanisms such as

codes of good agricultural practices and the application of efficient management

systems.

The existence of a framework of indicators helps to strengthen the financial and

management control of farms, something which is indispensable in periods of crisis,

while allowing the policy of change to be monitored.

Our research work is based on such indicators, and aims to provide a framework of key

performance indicators that will enable producer groups to analyse the technical,

economic, and environmental aspects of their farms. We believe that the performance

indicators we propose will help farmers to meet and assess requirements concerning the

respect and improvement of the environment, and the pursuit of quality, sustainable

farming, and competitiveness. Permanent monitoring of these indicators will also enable

benchmarking to be carried out among farms and will provide a tool that will promote

continuous improvement in the financial and agricultural management of farms.

We believe that this scenario calls for the definition of agri-environmental policies

based on cause-action-effect relationships between agriculture and the environment,

with a view to achieving a continuous improvement in the system.

Keywords: eco-conditionality, EC Agricultural Policy Reform, indicators,

sustainability, continuous improvement, benchmarking.

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AGRI-ENVIRONMENTAL INDICATORS IN THE MANAGEMENT OF

FARMS. THE SPANISH CASE.

1. Introduction

EC Agricultural Policy, the original goal of which was to guarantee the supply of

member states while providing an adequate income for farmers, has had a number of

undesirable collateral effects in the shape of production surpluses, an increase in EC

agricultural expenditure, and an impact on the environment. This is why EC

Agricultural Policy has been reformed a number of times during the four decades it has

been in existence. The latest reform to be approved (June 2003), implemented by

Council Regulation (EC) 1782/2003, introduces a change in economic policy with the

dual concepts of decoupling and single payment per farm. This represents a move away

from direct subsidies to production granted to farmers or associations of producers,

which are being gradually eliminated and decoupled from production. Most Common

Market Organizations (CMO) are to switch to the new system between 2005 and 2006

(with the exception of new member states) while for certain crops there is a transitional

period which ends in 2013 at the latest. The reform affects «Mediterranean products»

and sugar. Some Mediterranean agricultural sectors, such as cotton and tobacco, are

more sensitive to single payment per farm because of the nature of the crops or the

nature of the affected regions.

The reform also introduces measures to reduce the impact on the environment in

accordance with guidelines set out in the EC Common Agricultural Policy (CAP)

concerning social welfare, as can be seen in the proposals included in the Agenda 2000

CAP reform agreement for the period 2000-2006 on the quality and safety of foodstuffs,

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protection of the environment and animal welfare, conservation of the landscape and

rural areas, multi-functionality, sustainability, and competitiveness. This reform reflects

these proposals as, in addition to the concepts of decoupling and single payment, it

includes the notion of “eco-conditionality” which makes the receipt of subsidies

contingent on compliance with a number of environmental standards. In particular,

Council Regulation (EC) 1782/2003 and Commission Regulation (EC) 796/2004

introduce the obligation to adopt environmentally friendly Good Agricultural Practices

that allow farmers to bring quality and competitive produce to the free market, with

penalties if they should fail to meet the required standards. This is why it is so important

for farmers to define a code of Good Agricultural Practices that will also safeguard the

environment.

The general strategy of the European Union hinges on the integration of agriculture with

the environment based on the cause-action-effect relationship between them. The model

currently being proposed is the one adopted by the OCDE: the Pressure-State-Response

(PSR) model, developed as part of the Driving Force-Pressure-State-Impact–Response

(DPSIR) framework and the IRENA project. There is a framework of action for the

agricultural sector, in which management tools based on total quality and activity

management are vital elements.

Our research work is based on these tools and proposes the adoption of a framework of

key performance indicators that will allow agricultural associations to analyse the

technical, economic, social and environmental aspects of farms. This is very useful for

the managers of associations who need to have summarized, reliable information about

problems in farms and environmental trends. These indicators also make it possible to

compare and exploit the positive synergies of the farms with the best results on a

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regional and national basis, leading to the continuous improvement of the other farms

involved, thus leveraging the idea upon which benchmarking is based. We consider that

our proposed performance indicators will, on the one hand, help to implement and

assess UE strategy with regard to the respect and improvement of the environment, and

the pursuit of quality, sustainable farming, and competitiveness, as set out in the CAP

and, on the other hand, to clarify the strategic planning of farm holdings. Our research

paper takes as its starting point the definition of environmental policies as a result of the

application of the DPSIR model (Commission of the European Communities, 2000).

Our paper is divided into three parts: in the first part we provide a brief international

overview of the proposals from the OCDE and the European Commission regarding

agri-environmental indicators, and of the applications of those proposals in various

countries. In the second part we look at producers of a number of Mediterranean

agricultural products who are committed to sustainable agriculture and require support

tools. In the third and final part we provide a framework of performance indicators to be

applied to these farms at a nationwide level which will help them to achieve their

sustainability goals.

2. Agri-environmental indicators within the framework of the OCDE.

Agenda 21 in chapter 14 on the promotion of sustainable rural agriculture and

development addresses the need to readjust agricultural, environmental, and macro-

economic policy at a national and international level. It points to the participation of the

population and a better management of inputs so as to maintain soil productivity while

respecting the environment as one of the ways to implement that policy. It adds that

governments should play an active role in improving and expanding information about

agricultural and food early warning systems by carrying out research into the state of

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natural resources with regard to the production and planning of foodstuffs and

agriculture, in order to assess the impact on those resources and establish analytical

methodologies and tools. The last chapter of the Agenda refers to the need for

governmental and non-governmental organizations to produce sustainable development

indicators at both a national and a regional level.

Among the first proposals for farming indicators, even prior to the recommendations

made in Agenda 21, are those based on mathematical models such as the MIMIC

(Multiple Indicators / Multiple Causes) model developed by Bollen (1989), Joreskog,

and Sorbom (1989) and, subsequently, Esposti and Pierani (2000) which aims to

measure the causal relationships between certain variables. The Agenda prompted a

huge response in the form of a great many new indicators tailored to present day needs

and oriented towards planning support and strategic control (Brown, N.; 1999, Oñate et

al., 2000, European Commission, 2000, 2001,Chamberlain, B.; 2004).

We go on to look at farming based on the evaluation of different variables (van de Werf

and Petit, 2002), which has produced a number of methods including the Farmer

Sustainability Index (FSI) (1993), Sustainability of Energy Crops (SEC) (1996), Eco

Points (EP) (1996), Life Cycle Analysis for Agriculture (LCAA) (1997), Agro

Ecological System Attributes (AESA) (1997), Operationalizing Sustainability (OS)

(1997), Multi Objective Parameters (MOP) (1997) and Environmental Management for

Agriculture (EMA) (1998), and Agro Ecological Indicators (AEI) (2000).

In another collection of methods we take things a step forward by look at the present

situation of countries and farms (see Table no.1). In these methods governments play an

important role as users. We take as our starting point the study of eleven cases in

various countries in which the objectives, users, and spatial and temporal scope are all

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clearly defined. This allows us to develop a framework of indicators based on the

following principles (Payraudeau, et al. 2005):

- A clear concept of the method and its indicators.

- Consistency of indicators with observed values.

- Appropriateness of the indicators and method chosen to the users for

which it is intended.

Table 1: Indicator development methods (Payraudeau et al. 2005): Method Cases Objectives Users Scope Timeframe

ERM 1

(Environmental

Risk Mapping)

De Koning et

al.1997

Modelling of soil nutrient

balance in Ecuador

Researchers and policy

makers

National

Cells

Year-on-year

variation

ERM 2

(Environmental

Risk Mapping)

Giupponi et al.

1999

Modelling of the impact of water

quality in several scenarios in

Italy

Policy makers and local

governments

1840 Km 2

4 ha

30 years

LCA 1

(Life Cycle

Analysis)

Biewinga and van

der Bijl 1996

Evaluation of the ecological and

economic suitability of energy

crops in Europe

Researchers and policy

makers

4 European regions

45300 km2

Annual

LCA 2

(Life Cycle

Analysis)

Geier and Kopke

1998

Evaluation of the conversion of

traditional farming to organic

farming in rural Germany

Local governments and

farming advisors

Farm Annual

EIA

(Environmental

Impact

Assessment)

Rodrigues et al.

2003

Evaluation of sustainable

agriculture subsidized by the NT

in Brazil

Policy makers Farm Annual

MAS- 1

(Multi-Agent

System)

Petit et al. 2001 Evaluation of the amount and

quality of water, using socio-

economic models in multi-agent

systems in France

Stakeholders policy

makers and farmers

Farm 10 years

MAS- 2

(Multi-Agent

System)

Becu et al 2004 Modelling of the impact of an

irrigation system managed under

social and agronomic constraints

in a multi-agent system in

Thailand

Stakeholders policy

makers and farmers

327 Farm holdings 10 years

LP-1

(Linear

Programming)

Zander and

Kachele 1999

Optimization of various

production systems at farm

holding level using a linear

multi-objective programme in

Germany

Researchers and local

governments and non-

political organizations

40 and 32 farm

holdings

3 scales

Annual

LP-2

(Linear

Programming)

Hengsdijk and

van Ittersum

2003

Optimization of production

systems to maximize production

while minimizing impacts on an

Researchers and local

governments

Stratification into

units according to

climate and soil

31 years

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individual and regional scale in

Mali

type

AEI-1

(Agri-

Environmental

Indicators)

ECNC 2000 Development of the DSR model

at a macro level in Europe

Researchers and policy

makers

According to type

of indicator

Depends on the

indicator

AEI-2

(Agri-

Environmental

Indicators)

Rasul and Thapa

2004

Evaluation of the sustainability

of agriculture using ecological,

economic, and social indicators

in micro regions in Bangladesh

Researchers and policy

makers

110 farms

family farm

holdings

Annual

In an attempt to integrate all the various proposals at an international level, the OCDE

proposes a set of indicators which it calls agri-environmental indicators (see table 2)

which should conform to the following characteristics (OECD, 1997a), (FAO, 2003),

(Piorr, 2003):

- Policy relevant: that is to say the selected indicators should be

demand (issue) rather than supply (information) driven and address

the environmental issues facing governments and other stakeholders

involved in the agriculture sector.

- Analytically sound; that is to say, they should be measurable.

- Easy to interpret and communicate results to policy makers

- Economically viable; that is to say, that data collection and measuring

should not consume an excessive amount of resources.

The OCDE also identifies thirteen basic issues (nutrients, pesticides, water and land use,

land conservation, soil and water quality, greenhouse gas emissions, biodiversity,

wildlife habitats, agricultural landscape, farm management practices, farm financial

resources, and socio-cultural issues) which allow us to define 35 indicators for their

short-term development and another 20 for long- to medium-term development given

that they require further development and fine-tuning (European Commission, 2000).

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The specific framework to incorporate these indicators and reflect the cause and effect

relationship between agriculture, resources, and the environment was firstly set out in

the OCDE’s Driving Force- State- Response (DSR) model and subsequently in the

model designed by the European Environment Agency’s, known as the Driving Force -

Pressure - State- Impact - Response (DPSIR) model. These models predict the impact of

farming practices and the use of natural resources on biodiversity and natural

landscapes, and on any government actions that are being carried out. This results in an

ongoing process that receives continual feedback from the experience of previous years.

In this way, agri-environmental policy decisions can be made with greater insight

(Alvarez-Arenas, 2000) and farming strategy in any EU country, whatever its landscape,

cultural, or historical diversity, can be aligned with the UE’s global strategic policy.

This, therefore, is the model we will use when we put forward our proposals for a

number of improvements.

In Figure 1 below we can see a graph depicting the DPSIR with examples of each

component of the acronym which we will be looking at one by one later in our proposal.

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Figure 1: DPSIR model

Source: Document produced by the Commission of the European Community.

Communication from the Commission to the Council and the European Parliament (2000)

To establish the causal relationships between government policies, farming practices,

natural resources, and the environment is a complicated, multi-phase process. The

DPSIR framework has provided a consensus in the definition and production of the

agri-environmental indicators which, in turn, enables the data requested to be

standardized and benchmarked.

Later, the IRENA* project (a report on environmental integration indicators in

agricultural policy), provides the interaction between agriculture and environment in the

European Union (UE-15) based on the DPSIR approach. This project subscribes to and

validates the indicators proposed by the European Commission, choosing the 35 most

* This is a joint project of the Directorates General of Agriculture and Rural Development, Environment, Eurostat, and the Joint Research Centre of the European Commission coordinated by the European Environment Agency.

Driving Forces Farming practices

Input Use - Land Use -Land Management - Trends

Pressures - Benefits Benefits and Burdens Pollution - Resources

State Zone specific

Habitat – Biodiversity - Natural Resources -

Landscape

Impact Total Environment

Habitat – Biodiversity - Natural Resources – Landscape Diversity

Responses Factors influencing farming

practices Public Policy – Market Signals - Technologies and Skills – Social

Attitudes

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closely related to farm management. The resulting set of indicators is known as the

Core Set of Indicators for Agriculture (Petersen, J.E; 2004) (see Table 2).

Table 2: Core set of indicators

Source: Petersen, J.E; 2004

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Indicators * Irena Group Objectives Indicator to measure objectives1 * b Area under environmental support to agriculture Land area with financial support programmes to carry out environmentall beneficial activities

2 * b Regional level good farming practicesNumber of farmers meeting BPA standards (minimum standards are laid down in Commission Regulation 1750/1999

3 d Regional level objectives and degree of success Pending4 b Area under natural protection Area and % of land subject to crop restrictions due to being areas of natural protection5 a Market signals: Incentive for organic production Ratio between organic and conventional produce

Economic results of organic farm holdings compared with traditional onesMarket share of organic farm produce compared to total market for farm produce

Tech & Skills 6 a/c Technologies and skills: training level of day labourers? Training of day labourers in agro-environmental farmingAttitude 7 * a/b Area under organic agriculture Area under organic agriculture

8 * a Amount of nitrogen and phosphates in fertilizers used9 * a/c Consumption of pesticides10 * a Intensity of water usage Water usage per 1,000 € of output from irrigated arable land

11 * a Energy usageAnnual usage of diesel-type energy; information is limited to diesel products as agricultural fuels are easily distinguishable

12 b Land use: Topological changes Inventory of developments broken down by type and location13 * a/c Land use: crop or livestock

Management 14 * d Management Pending15 * a/c Intensification/Extensification: is the result of a rise in the Trend of the % of agricultural land devoted to forage

production rate per area or work unit Profitability trends of land under crops by chosen cropProduction trend of cereals etc. per work unitTrend of livestock units per hectare of forage

16 * a Specialization/Diversification: improved economic efficiency Importance and changes in types of agricultureProportion of revenues for the farmer generated by non-agricultural activitiesProportion of revenues for the farmer generated by non-agricultural activities

17 a/c Margination State and trend of crop density (SGM) and of farmers with or without heirs18 a Surface nutrient balance Total input of nutrients (organic and mineral fertilizers..) less crop consumption

Purchase of fertilizers by countries broken down by N or PFertilizer for livestockSeed consumptionPilot project to test the reliability of tools that measure CH4 balance in river basins, sewers? and reservoirs

19 a CH 4 emissions Aggregate figures of CH4, N2O, CO2 emissions in farming , weighted by global potential?20 c Pollution of farmland by pesticides Pending formal definition21 c Water pollution Pending formal definition22 a/c Water abstraction on the land / water stress Total amount of water pumped directly out of the ground by farners23 a/b/c Erosion of arable land leading to < production Location and estimate of the amount of topsoil lost

Covered land and farming practices in risk areas24 a Change matrix for covered land is vital to monitor development Change matrix for covered land broken down by size and variety25 b Genetic diversity at 3 levels: species, organisms, Total number and % in production of principal crops / livestock feed

and ecosystem Number of crop varieties at a national level / livestock at risk26 b Areas of high natural value Interrelated with indicator 427 a Renewable energy sources: Biodiesel & wood Area and volume of wood and oilseed crop production for producing biodiesel

Biodiversity 28 d Wealth of species as bioindicator for possible farming developmPending according to information required29 c Quality of arable land Farming areas where there is an imbalance between land capacity and its current usage30 d Level of nitrates and pesticides in water Pending31 d Levels of water on land Pending

Landscape 32 b State of landscape Number and diversity of memorable elements seen (pending fine-tuning)Habitats & Biodiversity 33 c Habitats and biodiversity Density of linear elements and covered land at a farm holding level

34 b GHG emissions Greenhouse gas emissions by economic sectorb Nitrate pollution Nitrogen emissions by economic sectorb Water use Water consumption by economic sector

Landscape Diversity 35 c Diversity and globality of agriculture Global agriculture diversity rates and their evolution over time

DPSIR Ref.

RESPONSES

DRIVING FORCES

BenefitsPRESSURES

Common policy

Mkt signals

Use of input

Land use

Trends

STATE

IMPACT

Pollution

Resource overspend

Natural Resources

Natural Resources

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3. The case of tobacco in Spain

Some Mediterranean agricultural sectors such as cotton and tobacco are more sensitive

to the change to a single payment per farm. In the case of tobacco, in the period 2006-

2010 its CMO intends to decouple subsidies from production, which will have a

profound effect on the sector and make its future outlook uncertain.

The European tobacco sector produced 344,327 t of tobacco from 132.336 ha under

tobacco at the time of the 2004 harvest (Spanish Tobacco Growers, 2006), mostly from

small holdings (between 5 and 10 ha). The European Union leads the world in imports

of raw tobacco and is the fifth largest producer (FAO, 2004) with Greece, Italy, Spain

and France being the main producing countries. Tobacco growing employs 453,887

people in some of the lowest income per capita areas such as Mezzogiorno in Italy,

northern Greece, and Extremadura in Spain (European Commission, 2003). Tobacco

farms are generally grouped into mercantile associations; at the time of the 2004

harvest, France had 3,900 tobacco producers, grouped into 9 cooperatives (Anitta,

2004). In Spain nearly all tobacco growers are organized into 10 producer groups, as

can be seen in the following table:

Table 3: APAS (Agricultural Producer Groups)

APA TOTAL 2003

PRODUCTION (kg) QUOTAS GROWERS SAT ASOC. AGRUPADAS TAB 11,559,051 1,876 1,714

IBERTABACO S.C. 8,319,644 1,028 989 SAT TABACOS DE TALAYUELA 5,974,005 158 151

COTABACO 4,166,270 283 259

TABACOS DE CÁCERES, S.C. 3,069,838 449 431

GRUTABA 3,172,751 289 274

TABACOS GRANADA 3,084,942 911 902

COUAGA 1,056,255 259 240

TABACHAVANA 218,412 70 70

TABACOS BIERZO 138,451 54 54

CONTR. INDIVIDUAL 2,364 12 11

TOTAL 40,761,983 5,389 5,095

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Source: MAPA, 2003

The reform which is already being implemented in Spain means that 40% of subsidies

are already decoupled from production, and subsidies will be completely decoupled

between 2010 and 2013, with 50% for the grower and 50% for funding rural

development measures. The model of reform chosen by the Commission carries a strong

risk that growers will abandon the crop. Decoupled subsidies encourage growers to stop

producing and this will have a very direct effect on certain areas of European countries

such as Macedonia, Thesally, and Thrace in Greece; Abruzzo, Basilicata, Campania,

Umbria, Apulia, and Veneto in Italy; Alsace, Aquitaine, Dauphiné, Nord, Midi-

Pyrenees, Poitou, Loire Valley in France, or Extremadura and Andalusia in Spain.

In Spain, the effects are already being seen: in fact for the 2006 harvest, tobacco

contracts are down by 16%. We are in a period of great uncertainty; growers have just

four years in which to redirect their investment. In the light of this situation, those

growers wishing to stay in the sector or change product need to look carefully at the

potential of their assets and make adjustments to the financial management of their

present farms. The first step is to analyse and control costs, which will enable growers

to offer quality products at a low price and in a way that is compatible with the

protection of health and the farming environment, and with sustainable agriculture. In

this scenario, we believe that a framework of indicators can help monitor the change

policy adopted by the various countries by supporting and facilitating its control,

management, and evaluation. The tobacco farming sector is making an effort to follow

the guidelines of the Member States with regard to preserving the environment and

contributing towards a sustainable agriculture with quality products. Countries such as

France and Italy are already working towards the continuity of the tobacco crop; they

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believe the answer lies in inter-professional associations that leverage Good

Agricultural Practices, the rational use of resources, and product competitiveness. In

Spain, work is also underway in the same direction; we are seeing the influence of

Associations for Integrated Treatments in Agriculture (ATRIAs) and Good Agricultural

Practices more and more in cooperatives†. The Inter-professional Tobacco Organization

(OITAB) has also been set up to strive towards the promotion of quality in production

and a better use of resources by means of training, research, and the monitoring of the

production process.

Meanwhile revenues are showing a clear downward trend. Up until now the EU subsidy

was an essential component of the final price received by the growers, which in Spain

amounted to between 80% and 90% of revenues, while the remainder was made up by

the processing companies. This would seem to indicate that the continuity of the

production of crops in crisis such as tobacco will largely depend on the control of costs,

the application of Good Agricultural Practices, and inter-professional associations that

can manage, standardize, and defend the interests of the sector.

All the above calls for a market oriented quality management system, one which is of a

multidimensional and dynamic nature in the sense of being able to adapt to the medium

and provide tools that promote continuous improvement (Oakland, 1989). Costs need to

be rationalized at every stage of a production process based on environmentally friendly

practices, and farms and cooperatives should be encouraged to group together in order

to capture positive synergies and offer a certified quality product able to compete

successfully in the market.

† As can be seen in the recent publication of the “Basic technical guidelines to improve the quality and competitiveness of Spanish Virginia tobacco” which speaks of the need for a quality standard and the application of GAP (Good Agricultural Practices)

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4. Proposal for key farming performance indicators based on the DPSIR approach

for benchmarking in Spain.

Within the framework of EC Agricultural Policy, the concept of sustainable agriculture

is currently immersed in a strategic transformation process aimed at meeting the needs

of society, improving decision adoption processes (Agenda 21), and being more

competitive. Consequently, there is a need to measure the efficiency of farm resource

management at both a strategic and operational level. We believe that the use of key

farming performance indicators would go some way to addressing that need and would

facilitate the decision making process (Chamberlain, B.2004), (Rodríguez, R., 1999).

After reviewing the framework of OCDE and EC agri-environmental indicators, and

since the set of indicators proposed by the European Commission only defines

management indicators, we propose going a step further by taking the DPSIR model as

a reference. This model adds and develops further key performance indicators which,

when complemented by five basic drivers of farming practices – financial capital,

natural resources, social capital, physical capital, and human resources (Bebbington,

1999) – can act as a thermometer of a farm’s performance, both per se and in relation to

the environment. The idea is to provide clear information about physical, economical,

and financial trends in this area, firstly to the managers of the farming associations and

then to agri-environmental policy makers at both a regional and national level, so as to

fuel opinion and debate about the principal problems, their causes, and the measures

adopted to address them.

These indicators will allow agricultural groups to analyse the degree of economic

sustainability of their farms and the use of factors that affect the environment, in such a

way as to be able to monitor all the farms in a group individually or as part of the group,

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and also monitor the performance of all the groups. This requires indicators to be

consensually agreed, properly referenced, and consolidated over a period of time

(Menge, 2003).

By working jointly with standardized indicators we can achieve national and

international benchmarking and capture positive synergies which, in turn, will bring

about a continuous improvement in the management quality of farms and their products

while bringing farming in line with agri-environmental policies.

The information obtained is used to measure productive efficiency in terms of revenues,

costs, and results. It also provides us with details about the application of the inputs that

are most directly related to the environment, such as the consumption of energy,

nutrients or phytosanitary products, while providing information about the producers’

level of training, the amount of land funded by the European Union, and the extent to

which Good Agricultural Practices (GAP) have been applied.

The study that gave rise to these indicators was based on a sample of 23 tobacco farms

in the River Tiétar valley in Extremadura (Spain), during the 2003 and 2004 harvests.

The crop involved was a monoculture of a single variety of tobacco – Virginia. The size

of the farms ranged between 5 and 50 ha with a production quota of between 16,720 kg

and 180,000 kg. Information was gathered by personal interviews with tobacco growers

and farm technicians. Knowledge of the value chain provided us with the information

we need to obtain our key indicators which allowed us to evaluate the performance of

each activity, the use of inputs, and the farming practices used, as well as correcting the

variables that need to be changed to make the farm more efficient. The model that is

best suited to farms, and therefore to the needs of growers in search of continuity and

quality, is one that combines the philosophy of activity-based cost management (under

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GAP) with excellence of quality. Another requirement is for a model that can address

failings in quality management. As Johnson, Kaplan and Cooper said (1996),

competitive enterprises require management systems that can efficiently interpret the

productive combination.

In order to be able to apply GAP and provide some results, both for individual farms

and for those forming part of agricultural associations, first we need to design an

information system to retrieve and summarize each farmer’s documentation. Each farm

should have a log or recording system on which to keep a record of technical information. It

should be maintained following accounting principles (it should be complete, systematic,

and regular) and it should be maintained on a permanent basis in order to provide a constant

monitoring of all crops grown and all farming activities undertaken at each location (Figure

2) together with the resources applied in each activity. Feedback should be constant.

Figure 2: Monitoring of farm

opera

tions

The proposed framework requires a degree of flexibility to adapt to current strategic

planning and to take into account the relevant variables affecting a farm; i.e. long or

short term, national or local, economic, social, and ecological levels. (Smaling and

Management and quality control system

Identification of farm and crop

Application of Good Admin-istrative Practices: document collection and classification

Application of Good Agricultural Practices: technical and economic specs

Financial Mgmt. Technical Mgmt – Environmental Mgmt

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Dixon, 2006). Therefore, before we can define these indicators, we need to know the

strategic goals of the farms as dictated by EU general strategy and the convergence of

theory and practice. In this way we can close the gap that exits between the information

obtained and the actual situation (Wirén-Lehr, 2000).

In terms of their technical and economic content, most of these indicators are aligned

with the DPSIR model for the purposes of relating farming practices and inputs with the

environment and the corresponding political actions undertaken. More specifically,

indicators have been developed for the Driving Force, Pressure, and Response sections

of the model. With regard to the Driving Force section, we aim to identify the causes

that put pressure on the environment within a given timeframe from the viewpoint of

the financial management of a farm. These causes are broken down into land use, input

use (amount of nutrients, phytosanitary products, energy, etc. consumed), and financial

management. We consider that the goal of farms should be to achieve productive

efficiency through the relationship between costs, revenues, and results. In this section

we see that the excessive consumption of inputs, inappropriate cultural practices, or the

poor utilization of infrastructure in general, are far from harmless to the economic

performance of a farm; on the contrary, they impact on this and other areas of the

DPSIR model. That is to say, overly high costs or the inappropriate application of inputs

have an immediate effect in the short term. We are referring, among other things, to the

reduction of the production per unit of surface area and poor quality products, all of

which is reflected in the profit and loss account. Such negative effects also have

medium- and long-term repercussions on the environment (habitats, landscape,

pollution...etc.). The quantification of these effects over time is one of the most

important aspects of UE policy aimed at protecting fauna, flora, and the landscape and

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making their protection compatible with farm production. This is why there is constant

research into ways of measuring the effect of poor practices and replacing them by

practices that will promote sustainable agri-environmental development and pave the

way for a virtuous circle.

In the Pressure section, the positive/negative effects of cultural practices in the medium

term are measured (Blanco, 2001, Rodríguez, 2001, Payraudeau, 2005). Among the

positive effects is the prevention of soil loss caused by erosion (contour farming,

utilization of cover crops, etc.) or the prevention of the proliferation of parasites (crop

rotation, diversification, etc.) with the consequent elimination of the damage caused by

phytosanitary products. Among the negative effects are the water and/and air pollution,

soil saturation and salinity... These effects, both positive and negative, are reflected in

the environment: in the quality of the water, air, soil, biodiversity, and in the ecosystem.

In short, the development of sustainable agriculture depends on the effective control of

the negative effects.

In the Responses section, we identify the political actions undertaken at a regional,

national, or the European Union (EU) level with regard to the funding of agricultural

development, research into growing methods, technology, etc., and we assess the degree

of compliance with GAP.

In order to be able to create indicators with this profile it was necessary to study the

productive processes of farms, in our case tobacco farms, so as to be able to identify the

activities (Figure 3) involved in their operation in the context of farming practices

adopted within the framework of the DPSIR model (see Table 4).

20

Figure 3: MAP OF FARMING ACTIVITIES AND PRACTICES

Activities map proposal for tobacco farming

10. Herbicides

09. Fertilization

07.Transplantation

08. Cultivation

06. Transplant production 01. Stalk and

root destruction.

02. Winter cover crop

03. Liming and organic materia

aplication

05. Nematicideaplication

04. Soil preparation

16.- Selection

17. Transport the tobacco to the

factory

15. Curing process

14. Harvest

13. Topping and sucker control

12. Irrigation

11. Other pesticides

10. Herbicides

09. Fertilization

07.Transplantation

08. Cultivation

06. Transplant production 01. Stalk and

root destruction.

02. Winter cover crop

03. Liming and organic materia

aplication

05. Nematicideaplication

04. Soil preparation

16.- Selection

17. Transport the tobacco to the

factory

15. Curing process

14. Harvest

13. Topping and sucker control

12. Irrigation

11. Other pesticides

09. Fertilization

07.Transplantation

08. Cultivation

06. Transplant production

09. Fertilization

07.Transplantation

08. Cultivation

06. Transplant production 01. Stalk and

root destruction.

02. Winter cover crop

03. Liming and organic materia

aplication

05. Nematicideaplication

04. Soil preparation

01. Stalk and root destruction.

02. Winter cover crop

03. Liming and organic materia

aplication

05. Nematicideaplication

04. Soil preparation

16.- Selection

17. Transport the tobacco to the

factory

16.- Selection

17. Transport the tobacco to the

factory

15. Curing process

14. Harvest

13. Topping and sucker control

12. Irrigation

11. Other pesticides

15. Curing process

14. Harvest

13. Topping and sucker control

12. Irrigation

11. Other pesticides

Source: Cano Montero 2004

21

DPSIR Ref. STRATEGIC OBJECTIVES GAP INDICATORS

prevent the development of pathogens destruction of remains of previous harvest machine hours to destroy remains/ha

prevent soil erosion cover crop machine hours to sow cover crop /ha

loosen and aerate the soil available techniques for leaving the soil in optimal conditions machine hours to prepare soil/ha

LAND USE

improve the composition and structure of the soil application of organic and liming amendments Kg amendments/ha

complement soil nutrients physio-chemical analysis of the soil, selection of fertilizers, control of fertilizer specifications units ( N, P2O5, K2O, etc.)/ha

INPUT USE

control damage to crops

if biological methods are not sufficient, apply phytosanitary products only when necessary (economic damage threshold), use of protective equipment, storage of products in appropriate places units (phytosanitary products)/ha

provide the soil with the optimal amount of water inspect irrigation system, use clean water, adjust irrigation to soil texture, cover plant needs m3 water/ha

equip workers for carrying out farm work control of labour by activities, identify mechanized and manual labour; identify family and hired labour

Temporary AWU/ha; permanent AWU/ha AWU; family/ha; AWU/activity; AWU/ha; AWU/harvest

rationalize the consumption of fuel or electricity based energy performance of necessary checks and adjustments units of fuel/ha. Type of energy/machinery

rationalize use of assets according to the needs of the farm holding monitoring of assets Hm/ha, hm/activity

MGMT: COSTS economic valuation of the inputs and economic valuation of the activities record of documentation (invoices, taxes, etc.)

€kw/ha, €inputs/ha, €/ha, €/activity, €/harvest, €production

MGMT: REVENUES revenues from the sale of farm produce record of sale contracts, and knowledge of their content €/ha, €/kg

DR

IVIN

G F

OR

CE

MGMT: RESULTS know profit per product and per farmer analysis of results and how they are achieved, continuous improvement

direct profit/ha, direct profit/kg, direct profit/family AWU, direct profit/permanent AWU

know the extent of farmland funded by agri-environmental subsidies

record of documentation concerning the used and funded surface area UAA in ha, no. of support programmes COMMON

POLICY

extent of GAP application record of farming practices used by growers and supervised by the agricultural advisor

degree of GAP compliance/farm; degree of GAP compliance/farming association

professionalization of farming courses, demonstrations, advice training hours/operative RES

PON

SE

ATTITUDE SKILLS introduction of ecological farming ha of ecological production/ha total farm

PRES

SUR

E

POLLUTION improve the environment control of the use of fertilizers, phytosanitary products and other inputs purchase of inputs per farm

22

The indicators developed in the Driving Force section need to be explained in greater

depth, since in order to information about costs we require a management control

system capable of classifying, valuing, and allocating costs to activities, so as to be able

to assess the efficiency of those activities and of the farm in general. This system should

also allow us to identify and evaluate the specific amounts and uses of various inputs

involved in each farming activity (phytosanitary products, fertilizers, plants, electricity,

fuel, machinery, and time employed) or in the key activities, so as to be able to measure

both the degree of application of codes of good practices in terms of the rational use of

inputs, and the economic effect of that use.

Information about revenues obtained from farm production and their associated costs

(Elad, C.; 2004) allows us to obtain results indicators. These will enable us to analyse

the various margins (margins per farm, per hectare, per work unit, on sales, etc.,.).

The indicators developed in the DPSIR framework are to be integrated in the

improvement plan. Here the cooperative or association plays an important role by

providing the farmer with advice and issuing reports on the results of farms, thereby

contributing to the improved performance of farms and the quality of products at a

regional level.

Well used, this battery of indicators will serve as a continuous improvement tool that

will impact on farming practices and the rational use of natural resources. The

possibility of comparing the indicators will allow us to exploit the positive synergies of

the farms with the best results, which will benefit both farm performance and the

environment, in accordance with benchmarking theory (Daniel, E. Porter, M. E.; 2003),

(Fritz, H. et al.; 2002), (RIRDC, 2001) and (Ronan, G. and Cleary, G.; 2000). This

23

approach can be extended to farms belonging to producer groups, at both a regional and

national level.

At a regional level the process of comparing indicators incorporating financial and non-

financial data provides us with an internal benchmarking system with the potential to

become a performance standard for agricultural holdings.

At a national level, comparison is more difficult due to a lack of transparency and the

growing complexity of agricultural chains, but this task will become easier once a

standardized set of indicators has been developed.

An added value of benchmarking is a set of management performance indicators known

as Best Value indicators (Ronan, G. and Taylor, P.; 2003) characterized by the

following attributes:

- consistency: so as to be able to make comparisons over time

- ability to summarize and present information in a convenient form

- existence of a minimum-maximum range for the indicator values

- improved diagnostic methods for existing problems

- input variations and, therefore, output variations can be managed and

optimized

Thus, benchmarking has become an important support tool in the quest for improved

competitiveness and performance. To be able to find differences with other farms of a

similar nature and then find the causes behind them is a major contribution to a

sustainable and competitive agriculture.

24

There is no point in using benchmarking unless you take into account the point at which

strategic farm planning interfaces with environmental, economic, and social issues. If it

is well used, benchmarking can help us to locate the source of problems quickly and

present the most significant indicators.

Finally, it should be stressed that the application of the DPSIR model requires the active

participation of farmers, policy makers and governments. This in turn requires an

organizational change to take place; that is, it requires farms to move towards their

integration in producer groups under the direction of inter-professional agricultural

organizations who, in liaison with the various social agents involved, will help design

and implement whatever strategies may be required.

The key performance indicator framework that we propose should go a long way to

striking a balance between economic imperatives on the one hand, and environmental

impacts and social concerns on the other. To achieve this balance we need to weigh our

performance indicators against these impacts and concerns in a cost-benefit analysis.

Finally, our proposed framework of indicators should be useful, flexible, and easy to

understand so as to provide farmers with easy access to our methodologies of analysis,

evaluation, and comparison. Thus, by means of comparison (benchmarking), either

using figures from other years or by comparing with farms with similar characteristics,

our proposed tool will be able to detect problem hotspots and therefore facilitate the

decision making process, while helping the government to implement a set of Good

Agricultural Practices for the sector to adhere to. The framework of indicators should

be flexible enough to adapt to the strategic planning of each individual farm and

overcome three constraints that arise at an international level. Firstly, there is a spatial

constraint, since the ability to develop and measure indicators at an international level

25

cannot be extrapolated to data obtained from agricultural smallholdings. Secondly, there

is the problem of overcoming time constraints; that is, the problem of finding causal

relationships between variations in the effects of agriculture on the environment in the

short, medium, and long term. Finally, we need to overcome the limitation of causal

relationships to economic, social, and environmental issues and look for causes beyond.

6. CONCLUSIONS

The present concept of agriculture is destined to change, driven by the opening up of the

economy, new environmental requirements, and the demands of competitiveness.

Social, health, and environmental legislation in Europe and the application of Good

Agricultural Practices are advantages in terms of delivering a quality crop but are

causing the price of agricultural products (tobacco, cotton) to lose competitiveness in

relation to other countries. Not to forget the fact that, once assigned production quotas

are exceeded, farms receive no EU subsidies. Faced with the situation of uncertainty

prompted by the partial or total elimination of subsidies, and with no room for

manoeuvre, the only option that farms have to survive is to form cooperatives,

rationalize each phase of the productive process, control costs, and leverage new tools.

Given the nature of most Spanish farms today, it is vital for farms to form producer

groups and use management tools (still in its infancy in Spain in this sector) that will

enable them to adopt Good Agricultural Practices and, therefore, to control and reduce

their costs, increase farming efficiency, and improve the quality of products. The

producer associations should be the main drivers of this conversion of farmers to a

business culture, while the farmer needs to take a more active role in the management of

his farm. Our proposal will provide these producer groups with another management,

26

evaluation, and feedback tool to use in their role as advisors and drivers of continuous

improvement of farm holdings.

We took the DPSIR model as our reference because it is the model that best establishes

the relationships involved in the sustainability of agriculture, from the basic drivers to

the use of natural resources and environmental impacts. This model was also proposed

by the UE to monitor the move towards the modernization or better overall performance

of farms.

In Spain, there is no still no real link between European policies (legislation, tax effects,

etc.) and the cultural-historical motivation and education of farmers. Therefore, it is no

easy task to monitor this change towards sustainable agriculture, combined with the

strategic planning of farms. Our proposal aims to facilitate the shift towards an

alignment of strategies and so we were careful not to overload our tool with too many

indicators that would make it cumbersome to manage, focusing instead on striving

towards a set of Best Value Indicators that would help establish thresholds beyond

which alarm bells would ring.

As a challenge for the future we are working towards a framework of indicators based

on the causal relationships between indicators that will meet the requirements of

usefulness, flexibility, and ease of understanding, thereby opening the door for farmers

to access a methodology based on analysis, evaluation, and comparison. More than

anything we are trying to take a further step forward in the introduction of business

management techniques to the agricultural sector and to correct any imbalances that

those techniques may have been causing in the past. For this to become a reality,

farmers, policy makers, and governments need to accept these indicators; the ultimate

success or failure of this proposal is in their hands.

27

GLOSSARY OF ACRONYMS USED:

ABC: Activity Based Costing

AEI: Agri-Environmental Indicators

APAS: Agrupación de Productores Agrarios (Agricultural Producer Group)

ATRIAS: Agrupaciones de Tratamientos Integrados en Agricultura (Associations for

Integrated Treatments in Agriculture)

GAP: Good Agricultural Practices

DPISR: Driving Force-Pressure-State-Impact-Response

FAO: Food and Agriculture Organization of the United Nations

FSI: Farmer Sustainability Index

LCA: Life Cycle Analysis

OECD: Organization for Economic Cooperation and Development

CMO: Common Market Organizations

OITAB: Organización Interprofesional del Tabaco (Interprofessional Tobacco

Organization)

CAP: Common Agricultural Policy

UAA: Utilized Agricultural Area

SEC: Sustainability of Energy Crops

UDE: Unidad de Dimensión Económica (Economic Dimension Unit)

AWU: Annual Work Unit

28

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